The work will include installation of small dams, blocking drainage channels and re-profiling parts of the upper beck catchment.
The aim is to re-wet the moor and slow the rate of water flowing from the moor in to river to help reduce flooding in Wharfedale.
The project has been commissioned by Bradford Council with the support of the Friends of Ilkley Moor.
It is hoped the work will have wider biodiversity benefits by encouraging the development of blanket bogs which allow peat to form which in turn stores carbon and help to reduce greenhouse gases and climate change.
"These are all important elements of moorland management delivering wider benefits for the area," said Kirsty Breaks-Holdsworth, a flood Risk officer from Bradford Council.
The work is part of wider plans to help mitigate flood risk across the district and is part of an Environment Agency funded project in collaboration with the Peak District National Park-based Moors for the Future Partnership.
Previously extensive planting of sphagnum moss took place on the moor last year to encourage peat formation while a similar project was carried out on on Harden Moor at Deep Cliffe Woods.
Simon Stokes, the Environment Agency’s project manager for the Environment Programme, said: “We are working with nature to reduce flood risk across the region and we’ve been working with Bradford Council to develop this programme over the last few years using nature-based solutions.
"We hope to be able to replicate similar approaches on other parts of Ilkley Moor and other moorland sites, to secure multiple-benefits from these landscapes.
"As well as reducing flood risk, these measures provide other benefits such as; providing habitats for wildlife and green space for communities; helping to improving air and water quality and helping Yorkshire mitigate and adapt to climate change.”
The scheme is part of Bradford Council strategy working to tackle climate change and create a more sustainable district.
For more information on the council's climate action, visit here.
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